Google confirmed Tuesday the FTC, one of the two federal antitrust authorities, had notified Google that it would be conducting a review of the $3.1 billion deal.

According to antitrust experts, any decision FTC officials make over whether the online ad market is separate from or simply part of the overall ad marketplace could have longstanding implications for other online business areas.

"This all comes down to how you define the market," said Robert E. Litan, a senior fellow with the Brookings Institution and a former senior official in the Department of Justice's antitrust unit. "What is so novel about this merger is it's the first time the antitrust authorities have had to decide how you define the Internet advertising market."

If the FTC decides that online advertising is its own market, it would have to consider whether a merged Google-DoubleClick would exert too much control over ad rates in that area.

Experts agree these questions could take FTC lawyers several months to resolve, especially given their potential implications for future mergers both in the online advertising market and among online businesses in general.

"I'm not sure you can directly translate a decision in this case to other marketplaces, but my instinct would tell me if it's found to be a distinct marketplace here that would be applicable to other areas of online business," said Bruce Fein, a former general counsel at the FTC.

For example, he said, that could affect online retailers or financial services providers.

Fein now runs a DC-based lobbying firm, Fein Associates, that has AT&T Inc.
T, -0.07%
as a client. The telecommunications giant had called for the merger to be reviewed by regulators.

Neither Fein nor Litan would say what they thought the FTC will eventually decide, but both agreed that the decision is potentially significant.

Google is among the largest platforms for text-based online advertising while DoubleClick is one of the largest brokers for online advertising.

DoubleClick doesn't actually sell ads. Instead, it serves as a broker between platforms like Google and companies that want to advertise their products and services. Once it places an ad on a Web site, it then maintains it as well as tracking hits and click-throughs for the client.

Combined, there's no doubt the merged company will have a large degree of influence in how the online advertising marketplace develops, but that itself isn't generally enough to reject a deal on antitrust grounds.

Google argues that since the merger was made public, four other takeovers have been announced. And that's evidence that the online advertising market is sufficiently competitive, the company said.

"We are confident that upon further review the FTC will conclude that this acquisition poses no risk to competition and should be approved," said Don Harrison, senior corporate counsel at Google.

In the last month, Google competitor Yahoo Inc.
YHOO, +0.85%
announced it was buying Right Media; Time Warner Inc.
TWX, +0.72%
unit AOL said it will acquire Adtech AG, and the U.K.'s WPP Group
WPPGY, +3.07%
announced it is buying 24/7 Real Media Inc.
TFSM

Not to be left out, Microsoft Corp.
MSFT, +1.57%
having lost to Google in the race to snap up DoubleClick, said it was to buy online advertising firm aQuantive
AQNT

This spate of potential deals could prove to be, as Google says, evidence of a thriving marketplace, or they could point to a rapidly consolidating marketplace that could be of concern to antitrust authorities.

Public interest groups, such as US PIRG, are hoping that, apart from the antitrust consideration, FTC lawyers will take into account the fact that a merged Google and DoubleClick would have access to a lot of consumer data and therefore should raise privacy flags.

"We think the combination poses tremendous threats to privacy," said Ed Mierzwinski of US PIRG.

He hopes the FTC, which doesn't have the authority to block a deal based on concerns over privacy, will use the case as an opportunity to set general ground rules for the use of consumer information gathered online.

According to Blair Levin, managing director of analysts Stifel Nicolaus, while the FTC couldn't reject the deal over privacy concerns, it could do so if it felt the two companies' control over consumer information erected too high a barrier to entry for competitors.

"It provides an opportunity for Google's competitors to shine a spotlight on what they fear might be Google's important competitive advantage: its unequaled knowledge of customer behavior on the Internet," said Levin in a recent research note.

Both Levin, and Andrew Frank, an analyst with research company Gartner, think the FTC will decide that online advertising is part of the overall advertising market and approve the deal.

"The antitrust argument would have to be that Google would be extending its dominance into a parallel market," said Frank. "I don't really see how acquiring DoubleClick satisfies that criteria."

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